"I think we're taking a bit of a pregnant pause," said Andy Kapyrin, director of research for RegentAtlantic, which has $3 billion in assets under management.
Biotech and health care stocks fell after President Donald Trump tweeted that he was working on a "new system" for drug prices, which would come "way down." Late Monday, Republicans released a proposal to repeal and replace the Affordable Care Act. The president said he supports the plan, which he said is also open to negotiation.
The S&P closed nearly 7 points lower, at 2,368. Almost all sectors closed lower, led by a 0.9 percent decline in the energy sector.
U.S. crude oil futures settled 6 cents lower at $53.14 a barrel. Oil prices gave up gains after Saudi Oil Minister Khalid Al-Falih gave mixed messages on future production cuts by the Organization of the Petroleum Exporting Countries.
Speaking at the CERAWeek energy conference in Houston, Falih said last year's historic agreement by OPEC and non-OPEC countries to curb supply and raise oil prices has improved market fundamentals. However, he said Saudi Arabia will only manage production for "a restricted period of time."
Oil prices fell in extended trade after the American Petroleum Institute said crude stocks rose 11.6 million barrels, versus the Reuters estimate of 2 million.
The U.S. Energy Information Administration is scheduled to report weekly crude inventories Wednesday morning. Analysts polled by Reuters expect a supply increase of 2 million barrels.
Earnings due before the bell Wednesday include Adidas, Bob Evans, Valspar, The Children's Place, Express, Orbital ATK, Yintech Investment and Vera Bradley. Bankrate, Camping World, e.l.f. Beauty, Sunrun and United Natural Foods are set to post earnings after the close.
— CNBC's Tom DiChristopher contributed to this report.